In a unique initiative, the fiscally stressed Kerala government will soon set in motion a process to tap its diaspora to raise funds for the state\u2019s physical and social infrastructure development. Pravasi Chitty, a chit fund for the non-resident Keralites (NRKs), will be launched on June 12, with an initial plan to raise Rs 10,000 crore from NRKs in the UAE in the current fiscal. In the next phase, the facility will be extended to cover the NRKs in the Gulf Cooperation Council (GCC) countries as well and the aim will be to mobilise\u00a0Rs 30,000 crore by 2020, official sources said. Immediately after it assumed office two years ago, Kerala\u2019s Left Democaric Front government announced a plan to raise funds for infrastructure from sources outside of the Budget and created a special purpose vehicle \u2014 Kerala Infrastructure Investment Fund Board (KIIFB) \u2014 for this purpose. While the principal source of the KIIFB corpus is state-guaranteed bonds \u2014 against an ambitious target of Rs 1 lakh crore, a sum of Rs 10,000 crore has already been raised via this route \u2014, the NRK chit funds were meant to be a supplementary source. \u201cIt (Pravasi Chitty) is probably the world\u2019s first digital online financial instrument,\u201d state\u2019s finance minister TM Thomas Isaac said on Tuesday. \u201cThe idea is to make capital expenditure spending less heavy on borrowing costs, while getting NRIs involved in their home state\u2019s development,\u201d he said. A robust pipeline of projects for financing by KIIFB is ready. What set the ball rolling is a recent amendment to the FEMA allowing NRIs to invest in chit funds in India. \u201cIn response to the feedback from some potential subscribers from the Gulf, we have made Pravasi Chitty, Shariat-compliant, excluding terms like interest,\u201d KM Abraham, CEO, KIIFB and a former Sebi member, said. Yield from chits can be estimated precisely only post-auctions. A hybrid product, it can be plied as an investment or a loan. As an investment, the Pravasi Chitty can command an average return on investment in the 10-12% band. As a loan, the average cost of funds would be about 5%,\u201d Abraham added. Kerala has limited budget outlay for capital expenditure. It is one of the eleven states that receive post-devolution revenue deficit grants from the Centre and the state\u2019s pension and salary bill of Rs 45,020 crore accounted for over 70% of its tax revenue in FY18. While the KIIFB funds are to be used largely for ventures that might not be profit-making \u2014 like houses for the homeless, upgrading schools\u2019 infrastructure, etc, \u2014 the state government claims that credible debt repayment facilities are being created, including a cess on auto fuels and an adjustment against development funds received to reduce borrowing costs. Chief minister Pinarayi Vijayan would open registration for Pravasi Chitty on June 12. The Kerala government has a captive chit fund outfit KSFE to run Pravasi Chitty. \u201cWe\u2019ve created a mobile app for customers. Pravasi Chitty will be fully digital, with facility to enroll, transact and bid in auctions online, using just a smartphone,\u201d A Purushothaman, MD, KSFE, said. Besides a virtual branch, there will be a 24X7 support centre to service NRIs. \u201cInitially, there will be a slew of 24 chit products of 30 monthly instalments, with the lowest monthly instalment at Rs 2,500. If NRI clients feel the highest chitty amount of Rs 10 lakh is too little, we may scale it up later,\u201d Isaac said. What adds to the lure is insurance cover and a pension scheme, in tie-up with Life Insurance Corporation.